Those Convenient $20 Bills Get Costly

Your Money

Major Banks Are Raising Atm Transaction Fees To $2 -- And Double Charging Means You May Pay $4.

July 4, 2001|By Dallas Morning News

WASHINGTON -- Watch your wallet -- or your bank account. The nation's banks are notching up the fees they charge for using automated teller machines.

As bankers point out, it remains true that if you use ATM machines operated by your own bank, you probably will not incur any fees. But if you use the money machines provided by other financial institutions, it is getting more expensive.

Edmund Mierzwinski, a consumer advocate with the U.S. Public Interest Research Group, said ATM fees have been on the rise for years. And now, some of the country's biggest banks are pushing the standard $1.50 transaction fee to $2.

"They are charging this because they can," Mierzwinski said. "They have not reached the boiling point yet with their customers." It remains to be seen how customers will react to $2 service fees. But many might get to the boiling point if they knew that the total service charges for using off-site ATMs is actually a lot higher.

That's because there are two fees -- not just one. First, your own bank charges you a "foreign fee" when you stray off the ranch and use another bank's ATM. And then the host bank also charges you a surcharge -- the fee you see disclosed on the ATM machine when you execute a transaction.

Nationally, Mierzwinski's consumer advocacy group survey showed the average foreign fee is $1.39 and the average surcharge is $1.47. That means that ATM transactions at banks other than your own would cost you an average of $2.86.

And if the largest banks are increasing both service charges to $2, then the cost of a cash withdrawal could be as high as $4.

Bankers object to the notion that customers are getting fleeced every time they use an ATM.

For starters, they said the majority of customers use their own bank's ATM and avoid all fees. Charlotte Birch, a spokeswoman for the American Bankers Association, said 57 percent of bank customers are paying no ATM fees and another 11 percent are paying no more than $3 each month.

"Most banks make this service free for their customers," said Birch, adding that most people choose their bank based on its convenience to their home or workplace. "If you prefer banking with ATMs, you have made a decision about where to bank at least partly on where the bank's ATMs are located."

Bankers argue that at $15,000 to $50,000, ATM machines are expensive to purchase and costly to maintain. They also argue that they are offering a service and should be allowed to charge noncustomers from whom they collect no other fees.

"If an ATM operator could not assess that convenience fee or surcharge, there is a reasonable chance that the ATM would not be there," said Stan Paur, president of Pulse EFT Association of Houston, whose electronic funds network supports 2,800 financial institutions in 22 states.

ATM machines were first deployed by banks in the 1970s, and customers did not have the option of using another institution's machines. Banks originally saw ATMs as a way to save money, knowing the machines could process transactions for less money than human tellers.

In the 1980s, the banks began to link their ATMs together in networks, and it did not take long before they imposed fees. The consumer group's survey found that ATM fees have tripled since 1996.

The imposition of ATM fees, along with a host of other charges for consumer services, came at a time when banks were scrambling to find new sources of revenue. They were eager to replace interest income lost when prime corporate customers realized they could raise money in the commercial paper market.